Italy’s Treasury has taken another step towards approving a state guarantee for a 6.3 billion euro ($7.1 billion) loan for Fiat Chrysler Automobiles (FCA) Italian unit, a government source informed Reuters on Wednesday.
The request for state support on such a large loan caused controversy in Italy as FCA is legally headquartered in the Netherlands. It is also due to pay its shareholders a 5.5 billion euro ($6.18 billion) special dividend as part of a planned merger with automaker PSA.
FCA has stated it asked for state support to help its domestic unit weather the crisis triggered by the coronavirus pandemic.
Italy’s state auditor has approved the guarantee, but it still requires to be signed off by Economy Minister Roberto Gualtieri, and given the green light by the country’s accounting court, the source informed Reuters, asking not to be named.
Both the Treasury and FCA have not commented on the matter.
The loan has been already approved by the country’s largest commercial bank Intesa San Paolo, which will fund it, and by export credit agency SACE, through which the guarantee will be given.
The loan is part of over 400 billion euros ($449 billion) Rome hopes to make available this year to support Italian companies, affected by one of the world’s deadliest coronavirus outbreaks.
Italian companies tapping state guarantees must refrain from paying dividends this year, while the Treasury reserves the right to ask for extra requirements.
Gualtieri stated earlier that FCA would have to fulfill commitments on investments and jobs and would face sanctions if it failed to achieve them.
The source refused to say whether the Treasury will impose conditions affecting the automaker’s extraordinary dividend.
As things stand, the state-backed loan should not legally prohibit the automaker from distributing the extraordinary dividend, as the payment is not due until next year and would be made by its parent company Fiat Chrysler Automobiles NV in the Netherlands.
